If you’re considering changing your residential mortgage to a buy-to-let mortgage, the first thing to do is get in touch with your lender.
You will need consent to let before renting your property, as not doing so is illegal and constitutes property fraud.
Ask your mortgage lender if there are any fees to be paid and what conditions need to be met for the switch. Consider the pros and cons before making a decision.
Remember, once your house or flat becomes a rental property, you must move out and find alternative accommodation.
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Why change a residential mortgage to a buy to let mortgage?
Switching your residential mortgage to a buy-to-let mortgage is not only possible but also a popular choice for homeowners looking to rent out their property. Whether you’re moving into a new home, relocating for work, or simply exploring property investment, converting your mortgage could open up new financial opportunities.
In 2023, over 83,000 buy-to-let mortgages were approved in the UK, highlighting the growing trend of turning homes into rental properties. Many homeowners make this switch for reasons such as:
Moving in with a partner while keeping their old home as an investment.
Relocating temporarily for work or travel.
Struggling to sell their property in a slow market.
Starting or expanding a rental property portfolio.
A buy-to-let mortgage allows you to legally rent out your property while benefiting from tailored lending terms that focus on rental income rather than personal earnings.
How to Change Your Residential Mortgage to Buy-to-Let?
There are two main ways to convert your mortgage:
1. Obtain Consent to Let
This is a temporary solution where your current lender gives you permission to rent out your property without switching to a buy-to-let mortgage. Key points include:
- Duration: Typically valid for 6–12 months, ideal for short-term lets.
- Fees: Lenders may charge an admin fee (around £100–£300) or increase your interest rate slightly.
- Conditions: You’ll stay on your existing mortgage product but must comply with the lender’s terms.
2. Switch to a Buy-to-Let Mortgage
For long-term rental plans, remortgaging onto a buy-to-let product is often more suitable. This involves:
- Affordability Assessment: Lenders evaluate the potential rental income rather than your salary. Most require the rent to cover at least 125%–145% of the monthly mortgage payments (known as the Interest Coverage Ratio).
- Loan-to-Value (LTV): Most lenders offer up to 75% LTV, meaning you’ll need at least 25% equity in the property.
- Interest Rates: Buy-to-let mortgages often have higher interest rates and are usually interest-only, keeping monthly payments lower but requiring repayment of the full loan at the end of the term.
Consent to Let vs Buy-to-Let Mortgage: Which Is Right for You?
If you’re unsure which option suits you best, consulting a mortgage broker can help clarify your choices.
Feature | Consent to Let | Buy-to-Let Mortgage |
Best For | Short-term letting | Long-term rental plans |
Fees | Small admin fee or rate increase | Valuation fees, arrangement fees |
Repayment Type | Stays on current residential terms | Often interest-only |
Duration | Temporary (6–12 months) | Permanent |
Rental Income Criteria | Not required | Must meet lender’s rental income ratio |
Steps to Convert Your Mortgage
Check Your Current Terms
Review your existing mortgage agreement for restrictions or penalties related to renting out the property.
Contact Your Lender
Inform them of your intention and ask whether they offer consent to let or buy-to-let options.
Prepare Financial Documents
If switching to buy-to-let, gather proof of rental income potential (e.g., letting agent estimates) and personal financial details.
Apply for Consent or Remortgage
Submit your application and pay any associated fees.
Update Insurance Policies
Switch from residential home insurance to landlord insurance, which covers tenant-related risks like damage or loss of rent.
Understand Tax Implications
Rental income is taxable, so be prepared for additional tax obligations and consult an accountant if needed.
Do I Need a Buy-to-Let Mortgage to Rent Out My Property?
Yes, if you plan on renting out your home long-term, you’ll need either consent to let or a buy-to-let mortgage. Renting without informing your lender could breach your mortgage terms and lead to penalties or repossession.
Can I Rent Out My House and Buy Another?
Yes, this is known as “let-to-buy.” You can convert your current home into a buy-to-let property while securing a residential mortgage for your new home.
What Happens If I Don’t Tell My Lender I’m Renting Out My Property?
Failing to notify your lender is considered a breach of contract and could result in financial penalties or even repossession of the property.
How Much Rental Income Do I Need for a Buy-to-Let Mortgage?
Most lenders require rental income to cover at least 125%–145% of monthly mortgage payments on an interest-only basis.
Would you sell your property instead?
Finding it impossible to switch from a residential mortgage to a buy-to-let? If the endless hoops to jump through, strict rules, and mounting fees are getting in your way, we’re here to help.
Or maybe the idea of dealing with landlord duties, legal paperwork, and keeping on top of the new Renters Reform Bill feels like too much to handle? Don’t worry—our friendly team is ready to step in and make things easier for you. Get in touch today and let us take the weight off your shoulders.
We can buy any house, flat or property for cash, as professional cash house buyers. We don’t need to secure funding, as we have the funds available to purchase your home directly, making the process as easy as 1-2-3:
- Contact us for a free cash offer.
- Accept our offer (with zero fees and covered legal costs).
- Complete the sale of your house and receive the full cash amount offered.
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
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- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
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